The New York Times’s Tom Friedman is getting a lot of mileage out of yesterday’s column on Detroit’s desire for a bailout. Here, on CNBC this morning, he gets into a fine rant on the subject (from 3:30 to the end) but it’s worth watching the earlier tirade on Bush’s foreign policy just to see Friedman in his new operatic mode. Friedman’s usual cuddly, quizzical tone has changed and Vanity Fair suggests the thought leader is cranky over losses closer to home.
As many peope know, Friedman is married to a mall developer’s daughter. General Growth Properties, the family business, has imploded as the company faces problems rolling over $1 billion in debt. If it can’t refinance, GGP might get pushed into bankruptcy.
Of course, none of this changes the fact that Friedman is right about the Michigan Congressional delegation and the way it has blocked government from creating an economic landscape that would have helped the auto makers thrive. “[I]nstead of focusing on making money by innovating around fuel efficiency, productivity and design, G.M. threw way too much energy into lobbying and maneuvering to protect its gas guzzlers,” Friedman wrote in his column.
He also brought in the big guns in the form of Paul Ingrassia, The Wall Street Journal’s one-time Detroit bureau chief and still an expert on the industry. In Ingrassia’s own op-ed on Monday, he wrote these words that Friedman seconded:
In return for any direct government aid, the board and the management should go. Shareholders should lose their paltry remaining equity. And a government-appointed receiver — someone hard-nosed and nonpolitical — should have broad power to revamp GM with a viable business plan and return it to a private operation as soon as possible. That will mean tearing up existing contracts with unions, dealers and suppliers, closing some operations and selling others, and downsizing the company. After all that, the company can float new shares, with taxpayers getting some of the benefits. The same basic rules should apply to Ford and Chrysler.
The letters in response to that Op-Ed are in today’s Journal and worth reading. Nonetheless, the tide seems to be running against bailing out Detroit. The management of the automakers may not be any better than the managers of the banks. But they have been a lot worse for a lot longer.